CITIES OF OREM AND PROVO

SPECIAL JOINT MEETING

351 West Center Street, Provo, Utah

December 1, 2010

This meeting was for discussion purposes only. No action was taken.

CONDUCTING Provo Council Chair Midge Johnson
OREM ELECTED OFFICIALS Councilmembers Margaret Black, Karen McCandless, Mark Seastrand, and Mary Street
PROVO ELECTED OFFICIALS Mayor John Curtis; Councilmembers Midge Johnson, Chair; Richard Healy, Vice Chair; Sterling Beck, Cynthia Dayton, Sherrie Hall Everett, and Steve Turley
OREM STAFF Bruce Chesnut, City Manager
PROVO STAFF Wayne Parker, Chief Administrative Officer; Matt Taylor, Council Director; and Louise Jorgensen, Executive Assistant

EXCUSED Orem Mayor Jerry Washburn and Councilmembers Carl Hernandez and Brent Sumner

Provo Councilmember Laura Cabanilla

Call to Order

Midge Johnson, Council Chair, called the meeting to order at 12:14 p.m.

Items of Common Interest

Recreation Center

Wayne Parker, Provo Chief Administrative Officer, advised the construction for the Provo Recreation Center will begin in the fall of 2012. He reported that the Recreation Center is currently going through the design process. Voters were promised that the City would not bond for more than the cost of the Recreation Center; therefore, the City is working hard towards this goal. The cost estimate for the Recreation Center is $39 million. However, with the current construction costs, it could be less. The Recreation Center will be built at North Park.

Museums

Mr. Seastrand questioned how Provo manages their museums. Mr. Parker replied that Provo City does not own any museums. At North Park, the City maintains the ground for the museums, but the Daughters of the Pioneers of Utah own the buildings. The land is leased to them. Mr. Parker continued that the Crandall Museum and the Car Museum are privately owned.

Mr. Seastrand discussed the Orem History Museum and Orem’s consideration of a Children’s Museum.

RAP Tax

Ms. Johnson inquired about Orem’s RAP Tax. Mrs. McCandless explained there are two components to a RAP Tax:

·  Funding is given for programming to privately owned non-profit 501(c)(3) organizations

·  Funding is given to publicly-owned facilities only

Mrs. Street noted the RAP tax was a grassroots effort in Orem. The tax is defined by State law as an eight-year tax, and Orem is in its fifth year. Orem City made policy decisions as to where to spend the tax. The three areas for the tax are recreational, cultural facilities, and cultural programming.

In answer to an inquiry from Mayor Curtis, Mrs. McCandless indicated the RAP Tax was on the ballot and theCity Council supported it; however, publications, fliers, campaigns, and mailings were done by private entities.

The Councilmembers concurred that the tax had to come from the residents. The Council supported it but took a back seat. The Tax Payers Association campaigned against it.

Mr. Seastrand remarked that one challenge Orem has had is that the RAP Tax was approvedwithout specific appropriation for the various categories. Since then, there has been some confusion as to how much allocation of the RAP Tax should go to different entities. It would be better to be more specific in the allocation of the money at the beginning of the ballot process.

Mrs. McCandless suggested it is better to be very clear on specifics of where money is to go so private groups promoting the RAP Tax do not feel a sense of entitlement. Implementing an Arts Council in advance of a RAP Tax is also a good idea.

Internet Sales

Mr. Seastrand discussed how Internet sales are increasing significantly but do nothave sales tax. The internet sales have an impact on communities in terms of delivery trucks andincreased traffic. The long-term implications on commercial districts, zoning, and certain applicationsneed to be considered when discussing potential funding in long-term budgetary planning. This is anelement that needs to be addressed, but how to go about it is the question. The State has made efforts in dealing with businesses that have a nexus in the State; however, the Statedoes not have a way to get the sales tax to the proper city for the proper function. Amazon and ebay do not have a nexus in any state. More and more there are “online” retailers that are generating retail sales but arenot generating funding for the cities. At some point, either through the League of Cities and Towns orthrough the Chamber of Commerce organizations, there needs to be a conversation on how to appropriately look at alternative funding sources and impacts on cities, zoning, and residents.The research is showing Internet sales are increasing sixteen to eighteen percent from last year. The sales havebeen increasing each year. Orem had the highest Internet sales in the State of Utah for purchases.

Ms.Dayton suggested the League of Cities andTowns could discuss this and then head up possible legislation.

Mr. Seastrand stated retailers feel threatened because they are required to charge sales tax wherethe nexus is not, which gives them a pricing advantage. The Federal Government is also looking into this situation.

Mr. Parker noted states have looked at suggesting one rate per state. This could be done by taking

an average of all taxes charged in the state and finding an average rate which would be charged to the

nexus. This presents the next problem of how to decide which entities receive the tax. The effortcollapsed a few years ago because of this dilemma. It is required that businesses file income tax each yearand fill in what sales tax the business would have to pay. Collection or accessing the rate and distributionof the revenue is the major problem in making a decision in this discussion. One thought was to chargeby zip code.

Mrs. Black stated she would be glad to bring this subject up to the League ofCities and Towns.

Young Adult Student Council

Mrs. Street inquired about the Young Adult Student Council recentlyimplemented in Provo.

Mayor Curtis replied that the Young Adult Student Council has had two meetings.At the first meeting, introductions were made. The age range of the students is eighteen to thirty years old. Fourdifferent City departments (Parks and Recreation, Community Development, Economic Development, andRedevelopment) came and discussed what each department does.The Council picked a chair at the next meeting, and they are ready to move forward. The StudentCouncil will pick their issues and work with the Administration and the Council in accomplishing theirgoals. The caliber of applicants was extremely high, and this was very pleasing to Mayor Curtis.Provo has an application on line for applying to be on the Council. The applications are given tothe Municipal Council for advice and consent. The intent is to have an open application. This is anadvisory council, which all councils are in Provo. Their power and influence would be according to theeffort, ideas, and research the Student Council puts into it. Between the two universities, 60,000studentsare involved in Provo.

iProvo

Mr. Parker discussed the note being carried on the telecommunications utility asset. When the utility was sold to Broadweave (now Veracity Networks), $6 million in letters of credit wererequired to be drawn on in case Veracity could not make their lease payment. This enabled the City tomake their bond payment. Over time, Veracity has been drawing the credit down. Several months are lefton letters of credit. Discussions and public discussions have been held to find solutions and alternativesto the growing gap and what it means to the City of Provo. The gap would mean a $4-6perhousehold raise in taxes. In 15 years, the tax would be gone. Residents are more accepting of thesituation when they find out what the reality is to them. A group from inside the City organization that is working with Veracity is working on a business plan. The City is developing a secondary plan (plan B) in caseVeracity defaults and the City cannot make its bond payment or Veracity decides to get out of the business.Provo is built out on this utility 100%. This is a telecommunications utility, treated like otherutilities, and all residents will pay something for it. The utility adds value to properties in the community.

Mrs. McCandless stated Orem is built out 40% with UTOPIA. Orem City has put out$200,000 per month and pledged 30 years equaling $114 million.

Mayor Curtis gave encouragement that people tend to panic concerning these things, but it willnot destroy the community. If Provo did take the utility back, it would be seven dollars per month per

household and Provo would make it.

Orem City figured theirs at nine dollar per month per household and they, likewise, would make it.

Mrs. Street stated that in talks with UTOPIA, it was interesting to note that Orem andProvo are not alone. The current telecommunications situation is being recreated all over the country. However, cities are moving forward no matter how long it takes. They are on the cutting edge offiber, and there will be positives in the end.

Mayor Curtis indicated that one should not ask now if the Cityshould have been involved with this utility. The talk should be, Provo got involved with thistelecommunications utility and they are now fiber connected.

Ms. Dayton stated fiber is definitely thefuture, and the medical field has a great need for fiber.

Ms. Street commented that Orem City received more yes votes on the ballot than no votes concerning UTOPIA. People generally do not understand the difference between wireless and fiber.

Educating the public and helping people understand the difference is very important. UTOPIA willeventually build out in Orem. There will be additional funding to accomplish that build out. The originaldebt was $400 million, and the build out has a long way to go for the eleven cities involved.

Set Date and Time for Next Meeting

The next meeting was scheduled for February 2, 2011, at noon in Orem.

The meeting adjourned.

Rachelle Conner, Deputy City Recorder

Approved: February 8, 2011

Joint Orem/Provo City Council Minutes – December 1, 2010 (p.3)